The IRS recently issued final regulations and removed 1994 proposed and temporary regulations pertaining to a program for the matching of taxpayer names to their taxpayer identification numbers (TINs). The regulations permit the IRS to initiate TIN matching programs as circumstances warrant. One such circumstance, matching by Federal agencies, is discussed below.

Commentators on the 1994 proposed regulations requested that participation in the TIN matching program enable payors to establish the "reasonable cause" defense necessary to excuse the payor from penalties under IRC section 6721 for failure to file correct information return information and section 6722 for failure to furnish a correct payee statement. The final regulations do not provide the comfort requested in the comments. Instead, the regulations state that nonparticipation or participation in the program will not adversely affect the payor's reasonable cause defense. Also, the extent to which participation in the matching program could establish reasonable cause will be covered in guidance still to be issued.

A special pilot program begun in 1994 that enabled online TIN matching was prematurely terminated due to a fire. The IRS announced it has no plans to resurrect the online TIN matching program. To further these TIN matching efforts, the IRS issued a revenue procedure setting out the rules Federal agencies should follow to check taxpayer name/TIN combinations. Under the procedure, an agency may furnish the IRS a payee's name and TIN, and the IRS will check to see that the name and TIN match. The program is intended to reduce the number of notices of an incorrect name/TIN combination issued under the employment tax regulations for back-up withholding purposes. *